January 2025
Baby Its Cold Outside.
The housing market remains frozen as we move into 2025. While there were some signs of thawing last year, (new listings, pending sales, closed sales, median sales prices are all up year over year)
the fundamental issue *lack of inventory* persists, leaving many buyers and sellers grappling with tough decisions. Let’s break down the current state of the market and what we might expect for the year ahead.
Sellers Don’t Want to Sell.
The “golden handcuff” effect of low locked-in mortgage rates is chilling. Over two-thirds of homeowners with mortgages still hold rates below 4%, providing little incentive to move unless life circumstances demand it. While we are seeing an uptick in listings from those needing to relocate or downsize, the overall seller pool remains at historic lows.
Home Value and Inventory Outlook.
Tight inventory conditions coupled with steady population growth continue to exert upward pressure on Lancaster home values. Median home prices in the county are up 80% over the past 10 years (6% compounded annually). In 2024 median prices rose by 4% and 2025 is likely to see a similar trend, with price growth expected in the 3%-4% range. The combination of stabilizing interest rates and incremental inventory improvements could bring more buyers and sellers into the market, but a return to a balanced market lies distant, like a mirage on a frozen tundra.
The Year Ahead: What To Expect.
In 2025, the real estate market will continue to defrost, but chilling effects will persist. Buyers will need to come to terms with higher prices and borrowing costs while sellers weigh the expenses of trading up to higher-rate mortgages. I expect to see a slight increase in transaction volumes this year.
Hopefully the above information has been helpful for you to put our local market conditions in perspective. This is certainly a more challenging time to buy with higher interest rates and low inventory but our buyers and sellers are winning. We are using creative strategies to get offers accepted and regardless of whether the uncontrollable market conditions are in our buyers’ or sellers’ favor or not, the most important factor remains…… whether the timing is right for YOU.
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